End of the Default Retirement Age – what now for older workers?

Last month marked the official end of the Default Retirement Age (DRA). The DRA has gradually been phased out from the start of April last year, and as of 5 October employers are no longer able to force employees to retire once they reach the age of 65.

It comes in response to a nation that is living and working longer than ever before. The impact of the financial crisis on people’s savings means many are re-evaluating their plans for later life and working longer. There are now a record number of employees working past the age of 65, with around 870,000 over 65s in work in the final quarter of 2010, allowing workers greater financial, social and physical independence.

If you are an  older worker approaching the state retirement age, your options may include:

  • To continue working – you may be able to continue working your normal hours and put off claiming your State Pension. Deferring your state pension may in fact earn you an extra State Pension for later life, or you could earn a one-off taxable lump sum payment.
  • Early retirement on partial pensions – you may take all or part of your pension while continuing to work (known as partial retirement). It is important to consider the implications of doing do on your final pension pot.
  • Work flexible hours – cutting down the amount of hours you work can give flexibility to continue to work and gradually get used to retirement.
  • Become self-employed – some may prefer to work on a self-employed basis and choose the amount and level of work they can take on, but it isn’t for everyone and will result in  different tax obligations.

Please talk to us to discuss your options on working past the state pension age or if you’re reaching retirement.